SCOTT WAPNER: ALRIGHT. INSTITUTIONAL INVESTOR NAMED HIM ONE OF THE COUNTRY'S RISING HEDGE FUND STARS AND HE'S HERE FOR A FIRST TIME EXCLUSIVE CNBC INTERVIEW. MICK McGUIRE IS THE FOUNDING AND MANAGING MEMBER OF MARCATO CAPITAL MANAGEMENT. HE IS HERE WITH SOME BIG NEWS TO MAKE AS WELL TODAY AND HE IS JOINED BY OUR KATE KELLY. GUYS, TAKE IT AWAY.

KATE KELLY: THANKS SO MUCH, SCOTT. MICK, THANK YOU SO MUCH FOR JOINING US TODAY. IT'S A PLEASURE TO HAVE YOU FOR YOUR FIRST CNBC INTERVIEW ON THE AIR TODAY. NOW YOU'VE BEEN ONE OF THE UP AND COMERS IN RECENT YEARS AS SCOTT MENTIONED WITH COMPOUNDED ANNUAL RETURNS SINCE FOUNDING YOUR FIRM IN 2010 OF MORE THAN 14%. YOU HAD A REALLY STRONG FEBRUARY, YOU TEND TO HOLD A LIMITED NUMBER OF LONG SIDE POSITIONS AND YOUR BIGGEST POSITION BANK OF NEW YORK MELLON IS ONE YOU'VE NEVER SPOKEN ABOUT PUBLICLY. TELL ME WHAT YOU THINK ABOUT IT AND WHY HAVE YOU HELD YOUR SILENCE ALL THIS TIME?

MICK McGUIRE: SURE. WELL, THANK YOU FOR BEING HERE. YOU KNOW, I'M A BIG FAN OF THE SHOW. OBVIOUSLY WATCH IT REGULARLY. BANK OF NEW YORK IS OUR LARGEST POSITION, IT HAS BEEN OUR LARGEST POSITION FOR SEVERAL MONTHS AND WE'VE HAD A PRETTY EXTENSIVE DIALOG WITH THE COMPANY, WITH THE BOARD, AND WITH SEVERAL SHAREHOLDERS AS WELL AND I THINK SHAREHOLDERS ARE REALLY FRUSTRATED AND WE ARE ALSO. THE COMPANY IS REALLY NOT ACHIEVING ITS POTENTIAL. WE THINK THAT, YOU KNOW, MEANINGFUL CHANGE IS NEEDED THERE AND IT'S UNLIKELY TO BE EXPERIENCED WITHOUT A MEANINGFUL CHANGE IN LEADERSHIP. SO WE ACTUALLY HAVE SENT A LETTER TO THE COMPANY TODAY ASKING FOR THEM TO SEEK THE REPLACEMENT OF THE CEO.

KELLY: SO YOU WANT THE CEO GERALD HASSELL TO STEP DOWN EVEN THOUGH HE WAS INSTALLED IN SEPTEMBER OF 2011 AND SINCE THEN THE STOCK PRICE HAS DOUBLED. THEY'RE GIVEN CREDIT BY SOME ANALYSTS AT LEAST FOR HAVING TRIMMED EXPENSES. YOU DISAGREE. TALK TO ME ABOUT THE METRICS AND WHY THEY NEED SUCH A DRASTIC CHANGE JUST A FEW YEARS INTO THIS NEW CEO'S TENURE.

McGUIRE: SURE. WE DO THINK THAT A CHANGE IS NECESSARY AND I DON'T THINK WE'RE ACTUALLY ALONE IN THAT REGARD. AS I SAID, WE'VE HAD A PRETTY ACTIVE DIALOG WITH A NUMBER OF LARGE SHAREHOLDERS AND ALL SHAREHOLDERS ARE FRUSTRATED BECAUSE DESPITE WHAT HAS BEEN A RISE IN THE SHARE PRICE ITSELF, A LOT OF THE KEY PERFORMANCE METRICS OF THE COMPANY HAVE NOT BEEN MOVING IN THE RIGHT DIRECTION. THE COMPANY IS LOSING SHARE IN ITS CORE CUSTODY AND ADMINISTRATION ASSET BUSINESS, REVENUES GROWING SLOWER THAN COMPETITORS, EXPENSE LEVELS IN PARTICULAR ARE GROWING AT RATES THAT ARE TRULY UNSUSTAINABLE, AND WHAT THAT LEADS TO IS DECLINES IN MARGINS, DECLINES IN RETURNS ON EQUITY AND EARNINGS PER SHARE THAT HAVE REALLY GONE NOWHERE OVER ALL OF THE CURRENT CEO'S TENURE. KIND OF MAKING MATTERS WORSE, DESPITE SOME OF THIS FRUSTRATION THAT WE AND OTHERS HAVE VOICED, THE COMPANY PUT OUT NEW THREE-YEAR TARGETS IN OCTOBER THAT IN OUR VIEW REALLY ONLY SUGGEST MORE KIND OF BUSINESS AS USUAL AND MORE OF THE SAME. AND THAT TO US WAS REALLY THE MOMENT WHERE WE THOUGHT THIS MANAGEMENT TEAM DOES NOT HAVE THE COMMITMENT OR THE SENSE OF URGENCY THAT WE THINK IS APPROPRIATE HERE AND WE NEED NEW LEADERSHIP.

KELLY: NOW, I HAD A CHANCE TO REVIEW YOUR LETTER AND THIS SOMEWHAT LENGTHY PRESENTATION THAT YOU HAVE ACCOMPANYING IT. YOU'RE ALSO GOING TO MAKE THAT AVAILABLE TO THE PUBLIC, CORRECT?

McGUIRE: THAT'S RIGHT, THAT'S RIGHT. SO, YOU KNOW, WE ARE A SIGNIFICANT SHAREHOLDER OF THE COMPANY. WE OWN JUST UNDER 2% OF THE BUSINESS. IT'S A $45 BILLION COMPANY.

KELLY: RIGHT. SO, EXPENSIVE TO BUY SHARES.

McGUIRE: THAT'S RIGHT. BUT IT'S A LARGE INVESTMENT FOR US. IT'S ABOUT $725 MILLION IN THIS ONE POSITION AND SO WE WANT OTHER STAKEHOLDERS TO BE ABLE TO REVIEW THE RESEARCH THAT WE'VE DONE. WE'VE NOT COME AT THIS POINT OF VIEW LIGHTLY OR WITHOUT A SIGNIFICANT AMOUNT OF RESEARCH, SO WE'RE MAKING THIS PRESENTATION AVAILABLE TO ALL STAKEHOLDERS. THEY CAN ACCESS IT ONLINE. THE WEBSITE IS ABETTERBANKOFNEWYORK.COM. AND TODAY, SHAREHOLDERS AND ALL STAKEHOLDERS SHOULD BE ABLE TO DOWNLOAD THAT PRESENTATION AND THE LETTER AS WELL AND REVIEW IT. AND I WOULD ENCOURAGE PEOPLE DO THAT. REVIEW THE MATERIALS AND IF THEY SHARE OUR POINT OF VIEW THAT CASE IS COMPELLING TO REACH OUT TO THE BOARD AND VOICE THAT AS WELL.

KELLY: SO A COUPLE OF YOUR KEY POINTS, JUST TO SUMMARIZE, AND I'VE SEEN THIS FROM SOME OTHER CRITICS AS WELL. OVERLY HIGH INFRASTRUCTURE, BALLOONING HEAD COUNT, YOU THINK THAT HEAD COUNT NEEDS TO BE DROPPED DRAMATICALLY AND YOU EVEN LOOK AT SOME COMPS FROM OVER THE YEARS WHERE YOU'VE SEEN 30, 40% HEAD COUNT REDUCTIONS AT SOME MAJOR COMPANIES THAT HAVE LED TO BETTER RETURNS. ROE, FALLING YEAR OVER YEAR DESPITE THE COMPANY'S OWN TARGET OF 10% BY 2014.

McGUIRE: RIGHT.

KELLY: NOW, I'M CURIOUS TRIAN FUND MANAGEMENT, ALSO A MAJOR STAKEHOLDER, HAS A LARGER STAKE THEN YOU ACTUALLY IN THIS COMPANY.

McGUIRE: THAT IS RIGHT.

KELLY: THEY ARE KNOWN FOR BEING ACTIVE AND VERY TOUGH, BUT SO FAR THEY'VE BEEN CORDIAL WHICH IS GENERALLY YOUR REPUTATION, MICK.

McGUIRE: SURE.

KELLY: THEY HAVE SOMEONE ON THE BOARD – ED GARDEN JOINED THE BOARD IN DECEMBER. DO THEY AGREE WITH YOUR POINT OF VIEW HERE?

McGUIRE: WELL, WE HAVE SHARED OUR POINT OF VIEW WITH TRIAN AND I HAVE A LOT OF RESPECT FOR TRIAN. THEY'RE VERY SMART. ED IS VERY SMART AS WELL AND WE'RE GLAD TO SEE HIM ON THE BOARD. YOU KNOW, I THINK IT'S TELLING THAT TWO, YOU KNOW, VERY RESEARCH INTENSIVE CHANGE ORIENTED INVESTORS ARRIVED, YOU KNOW, ESSENTIALLY AT THE SAME TIME AT THE SAME PLACE TO A BUSINESS THAT HAS A VERY GOOD FRANCHISE, BUT FOR A PERSISTENT, YOU KNOW, PERIOD OF TIME HAS REALLY BEEN FAILING TO DELIVER ON ITS METRICS. AND I THINK A LOT OF SHAREHOLDERS HAVE FELT THAT WAY, BUT HAVE REACHED A POINT WHERE THEY CAN NO LONGER PUSH ANY HARDER WHICH IS WHERE PEOPLE LIKE TRIAN AND PEOPLE LIKE OURSELVES CAN REALLY STEP IN TO ADVANCE THE BALL ONE STEP FURTHER.

KELLY: MICK, WE HAVE TO TAKE A QUICK BREAK. WE ARE GOING TO TALK ABOUT THIS MORE IN A JUST MINUTE. SCOTT, RIGHT BACK TO YOU.

WAPNER: YEAH GUYS, WE WILL TAKE THAT QUICK BREAK. WE WILL COME BACK AND BOTH KATE AND MICK WILL JOIN US HERE ON THE SET TO CONTINUE OUR EXCLUSIVE INTERVIEW ABOUT THIS STORY AND SO MANY MORE AS WELL.

SCOTT WAPNER: ALRIGHT WE ARE BACK NOW WITH MICK MCGUIRE OF MERCATO CAPITAL. KATE KELLY AS I SAID, HAS JOINED US ON THE SET. ALL THE TRADERS ARE HERE. SO I SAW THE PRESENTATION, I READ THROUGH, IT'S LIKE 150 PAGES. IS BANK OF NEW YORK REALLY THAT BROKEN? AND I GUESS I SAY THAT IF YOU LOOK AT THE STOCK PERFORMANCE, IT'S UP 17% OVER THE PAST YEAR. IT'S OUTPACED IT PEERS. THE COMPANY ITSELF PUTS OUT A KEY FACTS SHEET THAT DATED THE END OF JANUARY WHERE THEY GO THROUGH A NUMBER OF METRICS WHERE THEY DO SHOW THAT 2012, 2013, 2014 THAT TOTAL SHAREHOLDER RETURN AT BNY MELLON AT LEAST MATCHES AND IN MOST CASES, OUTPACES ITS COMPETITORS. SO WHAT IS SO BROKEN?

McGUIRE: WELL, WHAT'S SO BROKEN – IF YOU LOOK AT ACTUALLY MORE OF THE CORE OPERATING METRICS ITSELF, PARTICULARLY THE EXPENSE BASE OF THE COMPANY. IF YOU LOOK BACK TO THE MERGER OF BANK OF NEW YORK AND MELLON IN 2007, FROM 2007 TO TODAY, CORE REVENUE HAS INCREASED 4% IN TOTAL. THAT'S NOT A COMPOUNDED NUMBER. THAT'S 4% IN TOTAL. HEAD COUNT OVER THAT SAME TIME IS UP 22%. AND THESE TRENDS ARE THINGS THAT ARE BARELY SHOWING ANY SIGNS OF ABATING AND THAT IS SIGNS OF REALLY POOR EXECUTION ON THE PART OF MANAGEMENT.

WAPNER: SO YOU'VE SAID – I MEAN, AGAIN, THEY'LL SAY OKAY, WE HAVE EXHIBITED STRONG EXPENSE CONTROL AND YOUR ARGUMENT IS, YEAH, THAT'S GREAT, BUT NOT ENOUGH. YOU SAY MORE DRASTIC MEASURES ARE NEEDED?

McGUIRE: WELL, I THINK THE UNDERLYING EVIDENCE DOESN'T REALLY SUPPORT THE IDEA THAT THEY HAVE EXHIBITED STRONG EXPENSE CONTROL. THE MANAGEMENT TEAM HAS DESCRIBED EFFICIENCIES THAT THEY'VE ACHIEVED, BUT THE IMPLICATION OF THAT IS THAT HAD THEY NOT ACHIEVED THOSE EXPENSE EFFICIENCIES, EXPENSES WOULD HAVE GROWN AT TRULY AN ALARMING RATE. SO THEY'VE ONLY BROUGHT THE GROWTH RATE DOWN FROM TRULY ALARMING TO UNSUSTAINABLY HIGH.

KELLY: SCOTT, I JUST WANT TO JUMP IN WITH A QUICK NOTE. WE ASKED THE COMPANY WHAT THEY THOUGHT ABOUT YOUR ARGUMENT THAT THEY NEED CEO CHANGE. THEY HAVE NO IMMEDIATE RESPONSE TO THAT OTHER THAN SHARING SOME OF WHAT THEY CONSIDER TO BE THEIR RECENT PROGRESS. BUT I'M CURIOUS, WHY IS CEO CHANGE REQUIRED AS OPPOSED TO CALLING MCKENZIE OR DOING A TOP TO BOTTOM EXPENSE REVIEW? IS THERE A CULTURE PROBLEM AS WELL?

McGUIRE: WELL, I THINK PROBABLY. I MEAN, THIS IS A COMPANY, IN FACT, AS PART OF OUR PRESENTATION, WE RELEASE A THIRD PARTY MARKETING STUDY THAT WE COMMISSION TO GAIN KIND OF MORE GENERAL PERCEPTIONS OF THE BUSINESS AS A BRAND MATTER AND –

KELLY: AND YOU WENT SO FAR AS TO SORT OF REDESIGN THEIR AERO LOGO, RIGHT? AND RECOMMEND AN OUTDOOR CAMPAIGN AS ONE WAY OF CHANGING THE BRAND.

McGUIRE: THAT'S RIGHT. THAT'S RIGHT. BUT, YOU KNOW, THE POINT THAT CAME BACK FROM OUR BRAND CONSULTANTS WAS THAT THE COMPANY IS PERCEIVED AS AN OLD BUREAUCRATIC, SLOW MOVING COMPANY AND IT'S PERCEIVED THAT WAY BECAUSE IT IS. AND MOST OF THIS EXECUTIVE LEADERSHIP HAS BEEN AT THE COMPANY – THE CEO HAS BEEN AT THE COMPANY FOR OVER 40 YEARS, THE AVERAGE TENURE OF THE TOP FIVE OR SIX EXECUTIVES IS OVER 30 YEARS. AND SO THIS IS A LEADERSHIP GROUP THAT IF THEY WANTED TO ACT, THEY HAVE ALL THE INFORMATION TO BE ABLE TO ACT MORE AGGRESSIVELY BUT HAVEN'T DONE THAT.

WAPNER: LET ME ASK YOU, YOU MENTION THAT YOU HAVE SHARED THIS WITH TRIAN. HAVE YOU SPOKEN DIRECTLY WITH ED GARDEN WHO, AS WE HAVE SAID, IS ON THE BOARD OF BANK OF NEW YORK? DO THEY AGREE THAT COMPANY SHOULD REPLACE ITS CEO? BECAUSE I GUESS FROM A CRITICAL MASS SORT OF STANDPOINT, YOUR POSITION IS OBVIOUSLY RELATIVELY SMALL. RELATIVE TO THE SIZE OF YOUR FUND, THEY'RE MUCH BIGGER, THE SIZE OF THEIR POSITION IS BIGGER.

McGUIRE: YES.

WAPNER: YOU TWO COMING INTO AGREEMENT THAT THIS COULD HAPPEN COULD FORCE CHANGE FASTER THAN NOT. WHAT'S THAT STORY?

McGUIRE: WELL, WE HAVE SHARED OUR POINT OF VIEW WITH TRIAN. AND WE'VE SHARED OUR POINT OF VIEW WITH A NUMBER OF OTHER LARGE SHAREHOLDERS. I THINK – I DON'T WANT TO SPEAK FOR ED OBVIOUSLY, BUT I THINK HE'S MADE SOME COMMENTS TO THE EFFECT THAT HE THINKS EXPENSES ARE A KEY FOCUS OF THEIR INVESTMENT AND I THINK OUR VIEW IS, THAT MEANINGFUL CHANGE AND MEANINGFUL PROGRESS IS VERY UNLIKELY TO OCCUR WITHOUT A MEANINGFUL CHANGE IN LEADERSHIP. THAT YOU REALLY DO NEED TO SET THE TONE AT THE TOP AND WE DON'T THINK THAT THIS CEO HAS DONE AN EFFECTIVE JOB OF CREATING THAT SENSE OF URGENCY AND EFFICIENCY AS NECESSARY.

WAPNER: I WANT TO SWITCH THE CONVERSATION TO SOTHEBY'S, IF WE COULD. YOU'RE THE SECOND LARGEST SHAREHOLDER BEHIND DAN LOEB'S THIRD POINT.

McGUIRE: YES.

WAPNER: HE'S ON THE BOARD. ARE YOU ADVERSARIES THERE?

McGUIRE: NO. I WOULDN'T DESCRIBE US THAT WAY AT ALL. IN FACT, WE'RE VERY GLAD TO SEE DAN ON THE BOARD. AND VERY PLEASED WITH SOME OF THE PEOPLE THAT HE BROUGHT WITH HIM TO THE BOARD. WE DO THINK THAT THE COMPANY – WELL, AND I WOULD SAY THAT WE'RE HAPPY WITH THE CHANGES THAT WE'VE BEEN SEEING OUT OF THERE. A NEW CHIEF EXECUTIVE THERE WE THINK WILL ALSO BE A MEANINGFUL POSITIVE FOR THE BUSINESS.

WAPNER: WHICH THEY'RE LOOKING FOR, OBVIOUSLY, RIGHT? THEY ARE TRYING TO REPLACE THEIR CEO.

McGUIRE: YES.

WAPNER: YOU WANT THEM TO DO A BUYBACK NOW.

McGUIRE: THAT'S RIGHT. THAT'S RIGHT.

WAPNER: YOU'VE SAID THERE'S WILLFUL NEGLECT I GUESS, IN YOUR WORDS.

McGUIRE: INDEED. I HAVE SAID THAT. THAT'S RIGHT.

KELLY: AND YOU WANT THE REPLACEMENT OF THE CFO, EVEN AS THEY'RE LOOKING FOR A CEO, AS WELL AS AT LEAST A HALF BILLION DOLLAR BUYBACK.

McGUIRE: THAT'S RIGHT. THAT'S RIGHT. I THINK, YOU KNOW, IN TERMS OF OUR PHILOSOPHY IS THAT IN ORDER TO DRIVE REAL VALUE FOR SHAREHOLDERS, YOU NEED TO NOT ONLY HAVE A COHERENT BUSINESS STRATEGY THAT'S DRIVEN FROM THE LEADERSHIP SUITE, BUT YOU ALSO NEED A COHESIVE FINANCIAL STRATEGY. AND I WOULD SAY OVER THE HISTORY OF SOTHEBY'S, THE FINANCIAL STRATEGY HAS BEEN ESSENTIALLY NONEXISTENT. AND WHAT WE HAVE STARTED – WHAT HAS STARTED TO EMERGE FROM THE INFORMATION THAT WE'VE BEEN GATHERING IS THAT EVEN THEIR MORE RECENT FINANCIAL ACTIONS WERE REALLY DRIVEN MORE BY KIND OF TECHNICAL CONSIDERATIONS TO TRY TO FORESTALL LAST YEAR'S PROXY CONTEST, AS OPPOSED TO SOME MORE THOUGHTFUL, YOU KNOW, EXERCISE IN WHAT MAKES SENSE FOR THE BUSINESS ITSELF.

WAPNER: THEIR RESPONSE IS KIND OF, YOU KNOW, YOU'RE TRYING TO PUT THE CART BEFORE THE HORSE, RIGHT? LET US GET THE CEO FIGURED OUT FIRST. THAT WILL PROBABLY FORCE SOME SORT OF CHANGE OF PATH AT THE VERY LEAST. WHY NOT LET THEM JUST GET THE CEO IN THE CHAIR FIRST?

McGUIRE: POTENTIALLY. AND I THINK THAT THERE'S SOME ELEMENT OF REASONABLENESS TO THAT POINT OF VIEW. I THINK OUR POINT OF VIEW IS THAT THE AMOUNT OF EXCESS CAPITAL THAT THIS COMPANY HAS IS SO STAGGERING THAT BETWEEN THE EXCESS CASH THAT IT HAS TODAY, PLUS THE CASH IT IS LIKELY TO GENERATE OVER THE COURSE OF THE YEAR, THEY COULD EASILY RETURN IN OUR ANALYSIS, $500 MILLION OF CAPITAL AND STILL RETAIN CLOSE TO ANOTHER $500 MILLION TO BE ABLE TO PUT TOWARDS GROWTH INVESTMENTS WITH THEIR NEW CEO.

WAPNER: ALRIGHT, WE'RE GOING TO TAKE A QUICK BREAK. WE'LL COME BACK, WE WILL TALK EVEN MORE. THE TRADERS WANT TO GET INVOLVED AS WELL. OUR EXCLUSIVE CHAT WITH MICK McGUIRE CONTINUING ON THE OTHER SIDE OF THE BREAK AND MORE ON ACTIVISM AND THE MARKETS. PLUS, WHAT IT WAS LIKE TO WORK WITH BILL ACKMAN.

WAPNER: WE ARE BACK WITH MICK McGUIRE OF MARCATO CAPITAL. KATE KELLY AS WELL IS HERE. WANT TO TIE SOMETHING UP WITH MICK ABOUT SOTHEBY'S BEFORE WE MOVE ON?

KELLY: YES, THANKS SCOTT. QUICK QUESTION, MICK. GIVE US SOME NEWS ON YOUR REQUEST WITH THE DELAWARE CHANCERY COURT TO GET SOME UNREDACTED DOCUMENTS IN THIS KIND OF JUICY CASE FROM LAST YEAR, THIRD POINT VERSUS RUPRECHT. RUPRECHT, OF COURSE, BEING THE OUTGOING CEO OF SOTHEBY'S. YOU WANTED TO SEE SOME MORE DISCLOSURE IN TERMS OF WHAT EXCHANGES OCCURRED WITH SOTHEBY'S BOARD AND MANAGEMENT LAST YEAR, CORRECT? AND WHAT HAPPENED?

McGUIRE: SURE. THAT'S RIGHT. THAT'S TRUE. AS YOU POINT OUT, LAST YEAR THERE WAS LITIGATION BETWEEN THIRD POINT AND THE COMPANY AS PART OF THEIR PROXY CONTEST AND WE SOUGHT THE RELEASE OF DOCUMENTS THAT WERE FILED IN THAT AND THE REASON WHY WE WANTED TO UNDERSTAND THAT BETTER WAS, WE WANT TO MAKE SURE THAT THE DECISIONS THAT ARE BEING MADE AT SOTHEBY'S ARE DECISIONS THAT ARE TRULY IN THE BEST INTEREST OF THE BUSINESS AND THE SHAREHOLDERS AND NOT BEING DRIVEN BY OTHER MOTIVATIONS THAT SHOULDN'T BE, YOU KNOW, FACTORS IN BOARD LEVEL DECISIONS. AND YOU KNOW, THE LITIGATION UNCOVERED A SIGNIFICANT AMOUNT OF CORRESPONDENCE AND DELIBERATION ON BEHALF OF THE BOARD, AND SO IT'S AN OPPORTUNITY TO REALLY GET A REALLY UNIQUE WINDOW INTO THE LOGIC AND KIND OF MOTIVATIONS OF THE BOARD MEMBERS.

KELLY: AND YOUR REQUEST WAS MOSTLY GRANT?

McGUIRE: THAT'S RIGHT. SO WE SOUGHT THE RELEASE OF FOUR PRINCIPLE DOCUMENTS, THREE OF THOSE WERE NOT CHALLENGED BY THE COMPANY, ONE OF THEM DOES CONTINUE TO BE CHALLENGED BY THE COMPANY AND WE'RE GOING TO CONTINUE TO SEEK THE RELEASE OF THAT AS WELL.

WAPNER: YOU CUT YOUR TEETH SO TO SPEAK WITH BILL ACKMAN.

McGUIRE: INDEED.

WAPNER: WHAT WAS THAT LIKE? HOW LONG WERE YOU THERE?

McGUIRE: I WAS THERE FOUR YEARS. JOINED IN KIND OF THE EARLY DAYS, EARLY '05 AND MOVED ON IN '09 TO PREPARE THE LAUNCH OF MARCATO. AND IT WAS, YOU KNOW, A TRULY FORMATIVE EXPERIENCE. BILL IS A BRILLIANT GUY, HE'S EXTRAORDINARILY CREATIVE, AND THE VELOCITY OF IDEAS THAT BILL COMES UP WITH AND THE TEAM THERE, MOVE THROUGH, IS A REALLY POWERFUL PLACE TO GET UP TO SPEED.

KELLY: AS YOU KNOW, BILL HAS HAD THIS CONTROVERSIAL SHORT POSITION IN HERBALIFE. I'LL ASK YOU MAYBE OPINE ON THAT STOCK IF YOU HAVE A VIEW. BUT DO YOU TAKE SHORT ACTIVIST POSITIONS? IS THAT SOMETHING YOU HAVE DONE?

McGUIRE: WE DO NOT. WE DO SHORT WHEN WE FIND GOOD STANDALONE SHORT OPPORTUNITIES, BUT THE ACTIVIST SHORT LANDSCAPE IS – SHORTING IS VERY, VERY DIFFICULT ON ITS OWN, AND ACTIVIST SHORTING ITSELF HAS ALL SORTS OF ADDITIONAL, YOU KNOW, CHALLENGES TO THEM AND SO WE DON'T REALLY PURSUE THAT AS A CORE BUSINESS STRATEGY. I DON'T MYSELF HAVE A POINT OF VIEW ON HERBALIFE, BUT I AM FAMILIAR ENOUGH WITH BILL THAT WHEN HE HAS THIS MUCH CONVICTION, HE IS NOT GOING TO STOP.

WAPNER: YOU'RE KIDDING.

McGUIRE: YEAH. RIGHT.

WAPNER: I THINK WE'VE ALL LEARNED THAT. STEVE WEISS, I KNOW, HAS SOMETHING FOR YOU.

STEVE WEISS: YEAH, MICK, WE MET ORIGINALLY WHEN YOU WERE CHAIRMAN OF BORDERS GROUP.

McGUIRE: INDEED.

WEISS: SO NOT ONLY DOES HE HAVE HEDGE FUND EXPERIENCE, YOU RAN BORDERS GROUP. SO YOU KNOW FROM BOTH SIDES. COUPLE OF NAMES IN YOUR PORTFOLIO ARE KIND OF INTERESTING. LIFETIME FITNESS, YOU OWN THAT.

McGUIRE: YES.

WEISS: AND EVERY POSITION YOU HAVE IS A DECENT SIZE POSITION BECAUSE YOU'RE VERY CONCENTRATED. AND THEY RECENTLY ANNOUNCED THEY'RE LOOKING FOR PRIVATE EQUITY. WHAT DO YOU THINK THAT'S WORTH IN TERMS OF YOUR ANALYSIS?

McGUIRE: WELL, I THINK YOU'RE RIGHT, WE ARE THE LARGEST SHAREHOLDER OF LIFETIME FITNESS AND WE BUILT THAT POSITION ABOUT A YEAR AGO AND OUR INITIAL THESIS WAS THAT THEY OWNED A REALLY SUBSTANTIAL AMOUNT OF REAL ESTATE, THAT THE ANALYST COMMUNITY WAS FOCUSD MORE ON KIND OF THE INCOME STATEMENT METRICS AND NEGLECTING THE FACT THAT THE REAL ESTATE WAS PROBABLY WORTH AS MUCH OR MORE AS THE ENTIRE MARKET CAP OF THE COMPANY AT THAT POINT IN TIME. SO WE WERE PUSHING THEM TO PURSUE A SEPARATION OF THE REAL ESTATE BUSINESS FROM THE OPERATING BUSINESS. AND OUR VIEW WAS THAT IF THEY DID THAT, THE VALUE OF KIND OF THE SUM OF THE PARTS IF YOU WILL COULD BE AS HIGH AS $75 A SHARE.

WEISS: 65 NOW I BELIEVE.

McGUIRE: YEAH. PROBABLY IN THE HIGH 60s RANGE.

WAPNER: THERE IT IS. 65 AND CHANGE RIGHT NOW.

McGUIRE: YEAH. AND WE DO THINK THAT THAT IS THE POINT AT WHICH, YOU KNOW, THESE TWO INDEPENDENT UNITS WOULD LIKELY TRADE AND THE COMPANY ANNOUNCED IN AUGUST THAT THEY WERE PURSUING THAT WHICH WAS A REALLY NICE STEP AND WE'VE BEEN LOOKING FOR THE RESULTS OF THAT CONCLUSION. IT TAKES SIX MONTHS OR SO TO USUALLY GET THROUGH THAT PROCESS. AND NOW THE JOURNAL IS I GUESS HAS MENTIONED THAT THEY MAY BE TAKEN PRIVATE. AND SO THERE HASN'T BEEN PRICE TALK YET. IT'S KIND OF UNCONFIRMED. BUT I COULD VERY EASILY SEE IT BEING, YOU KNOW, HERE OR NORTH OF HERE BECAUSE THE ASSETS ARE VERY, VERY FINANCEABLE.

JOSH BROWN: I WANT TO GO BACK TO BANK OF NEW YORK MELLON BECAUSE VOLUME SEEMS TO HAVE PICKED UP IN THE NAME AND IT'S A NEW POSITION THAT YOU'RE TALKING ABOUT FOR THE FIRST TIME TODAY. SHOULD THERE BE ANY KIND OF REVENUE GROWTH THERE GIVEN WHAT'S GOING ON WITH BANKING, WITH REGULATION, WITH WHERE INTEREST RATES ARE? ISN'T THIS A BUSINESS THAT MAYBE SHOULD JUST BE BIDING ITS TIME UNTIL THE ENVIRONMENT CHANGES? MAYBE OTHER COMPANIES SPIN OFF ASSETS AND THEY BUY THEM, THAT KIND OF THING? OR DO YOU REALLY THINK THAT THEY COULD BE DOING SOMETHING OTHER THAN WHAT THEY'VE BEEN DOING?

McGUIRE: YEAH. SO THERE ARE TWO SIDES TO THAT EQUATION. THERE IS NO QUESTION THAT THE INTEREST RATE ENVIRONMENT AND THE VOLATILITY ENVIRONMENT AS WELL, THEY HAVE A SECURITIES LENDING BUSINESS AND AN FX BUSINESS.

McGUIRE: THAT IS TRUE AND A LOT OF OTHER FINANCIAL INSTITUTIONS ARE SUFFERING, YOU KNOW, CHALLENGING REVENUE TRENDS AS A RESULT. BUT WHAT WE SEE WHEN WE LOOK OUT AGAIN AT STATE STREET OR WE LOOK OUT AT OTHER MAJOR FINANCIAL INSTITUTIONS THAT THEY HAVE BEEN TAKING MUCH MORE AGGRESSIVE EXPENSE ACTIONS IN ORDER TO MAINTAIN MARGINS, IN ORDER TO MAINTAIN RETURNS ON CAPITAL, IN WHAT HAS BEEN A VERY CHALLENGING ENVIRONMENT. AND WE DON'T SEE BANK OF NEW YORK BEING AS RESPONSIVE TO THE CHALLENGING REVENUE ENVIRONMENT TO MAINTAIN PROFITABILITY. THE OTHER SIDE OF THAT IS ACTUAL REVENUE GROWTH BY FINDING NEW OPPORTUNITIES IN WHAT IS A NEW ENVIRONMENT AND WE ACTUALLY DO THINK THAT BANK OF NEW YORK'S MARKET POSITION AS A CUSTODIAN, POSITIONS THEM TO BE ABLE TO OFFER MANY MORE SERVICES THAT THEY COULD BE EARNING FEES FROM IN TREASURY FUNCTION, IN RISK MANAGEMENT FUNCTIONS, ESSENTIALLY KIND OF BEING THE BANK TO THE BUY SIDE AND WE DON'T SEE THEM MOVING AS OPPORTUNISTICALLY INTO THOSE AREAS EITHER.

WAPNER: WE GOT TO WRAP THIS UP IN JUST A SECOND, BUT IN LIGHT OF THE MARKET SELL-OFF THAT WE'RE WITNESSING TODAY, DOW IS DOWN 250.

McGUIRE: YEAH.

WAPNER: A LOT OF IT PROBABLY HAS DO WITH CONCERNS THE FED IS GOING TO HIKE MAYBE AS EARLY AS THIS SUMMER. DO YOU HAVE A VIEW ON WHEN YOU THINK THEY WILL AND WHEN YOU THINK THEY SHOULD?

McGUIRE: WELL, WE'RE MOSTLY BOTTOM'S UP GUYS. SO WE DON'T TEND TO OPERATE WITH A MACRO VIEW, BUT A LOT OF THE ACTIVITIES THAT WE'RE OBSERVING IN OUR PORTFOLIO INDICATE THAT THE U.S. ECONOMY IS STRENGTHENING AND SO THE IDEA THAT THE FED WOULD BE LOOKING TO RAISE RATES IN, YOU KNOW, THE NEXT 12 MONTHS MAKES A LOT OF SENSE TO US. AND WE ACTUALLY THINK THAT'S ONE OF THE REASONS WHY WE'RE ATTRACTED TO BANK OF NEW YORK, YOU KNOW. IN A HIGHER RATE ENVIRONMENT THIS BUSINESS IS GOING TO GENERATE QUITE A BIT MORE INCOME THAN IT CURRENTLY IS TODAY GIVEN THE STRUCTURE OF ITS BALANCE SHEET.

WAPNER: WE GOT TO WRAP IT UP.

KELLY: A LITTLE ONE? NO.

WAPNER: WE HAVE TO WRAP IT UP.

KELLY: OK, ALRIGHT.

WAPNER: I WANT TO GET MORE ON THE SELL-OFF HERE. THANK YOU SO MUCH FOR COMING IN.

McGUIRE: SURE THING.

WAPNER: KATE, OF COURSE, THANKS TO YOU FOR FACILITATING THE WHOLE THING AND MAKING IT HAPPEN.

KELLY: MY PLEASURE.

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